What type of business is owned and operated by one person?

A sole proprietorship is a type of business structure that is owned and operated by a single individual. This arrangement allows the owner to have complete control over all aspects of the business, including decision-making and the profits generated. It is often the simplest and least expensive form of business to establish, as it generally does not require formal registration with the state beyond obtaining necessary licenses or permits.

In a sole proprietorship, the owner is personally liable for any debts or obligations incurred by the business, which means that personal assets could be at risk if the business faces financial difficulties. This characteristic distinguishes it from other types of business structures, such as corporations or limited liability companies (LLCs), where liability is typically limited to the assets of the business itself.

The sole proprietorship also benefits from straightforward tax treatment, with income and losses being reported on the owner’s individual tax return, thus avoiding the double taxation scenario that corporations can face. This structure is commonly used by small businesses, freelancers, and independent contractors, making it a popular choice for individuals looking to start their own ventures with minimal regulatory burden.